International Socialist Review, Winter 1960

John Marshall

Where Nationalization Went Wrong

Power at the Top
by Clive JenkinsMacGibbon & Kee, London. 1959. 292 pp.

Why did the British Labor party lose the 1959 elections? Why was it unable to generate more enthusiasm for its achievements and more support for its program even among the working people?

Several clues to an answer are contained in this critical survey of the nationalized industries by one of the best-informed of the younger generation of union leaders in Great Britain.

When Labor took over the government in 1945, it instituted many long-overdue reforms which were welcomed by the workers. High hopes were aroused by the nationalizations of the railroads, airways and road transport, the coal mines, public utilities (gas and electricity) and the steel plants.

By 1959 there was widespread disappointment in the results of these nationalizations. What had gone wrong?

Labor took under public ownership less than twenty per cent of Britain’s industry; the bulk stayed in capitalist hands. A pailful of planning could hardly be effective in a sea of capitalist competition and profiteering.

Ironically, partial nationalization brought considerable benefits to the capitalist class as a whole. “It rescued certain industries from bankruptcy, bailed some out, and put others on parole. By its over-generous compensation it saddled the new corporations with economic liabilities and agreed on a “bygones be bygones’ policy with the financial interests which milked certain industries of large profits and neglected to maintain an adequate program of reinvestment and research,” Jenkins points out.

Moreover, it gave “a shot in the arm to an ailing capitalist economy by ’unlocking’ capital to an extent undreamed of by the shareholders in the industries taken into public ownership. This capital has led to the flourishing existence of holding companies with large assets which have been investing in the ’growth’ sectors of the economy and earning higher returns than they had done for many years in their former fields.”

If the lush payments to the old proprietors converted their corporate liabilities into liquid assets, the most efficient operation of the newly nationalized industries and the cheap prices they charged for their goods and services have enabled the private sector to rake in extra profits.

The author is principally concerned to show that the top executives in charge of the nationalized industries are the same men who previously served private enterprise or who belong to the ruling class. He documents this in detail. While Labor was still in office, Prime Minister Attlee reported that, of the 131 names on central nationalized boards, sixty-one also held directorships in private companies, twenty-three were knights, nine were lords, and three were generals. Since 1951 this capture of control has been stepped up by the appointments of the Conservative government which, in addition to denationalizing steel, has sought to make the management of the nationalized industries into duplicates of the giant capitalist corporations.

Jenkins lists three positive gains the trade unionists received from the nationalizations. These are: greater security in employment; promotion and training at lower levels are now more regularized and easily available; and joint consultation is some check upon arbitrary acts of management.

“But,” he concludes, “these gains fall far short of what was anticipated. The worker still loses stature when he enters the factory gates.” There has been a “re-transfer of power to persons linked with the tiny but highly influential groups that in reality govern the country.”

The form of ownership was changed but not its control. Consequently, “the two-three million people employed in nationalized industry, although now better informed about their individual enterprises, still lack that sense of participation in daily and long-run managerial conduct which is inseparable from a share in the power to decide.

Since Labor’s electoral defeat prominent spokesmen for right-wing opinion like Douglas Jay have called for the explicit renunciation of nationalization in to flout the traditions of the party. Although the Gaitskell leadership fears to flout the traditions of the party and the sentiments of the ranks by open surrender to conservatism on this key question, it is uninclined to push for more public ownership.

Jenkin’s criticisms of the deficiencies of the nationalized industries proceed from the opposite standpoint. He recognize that public ownership of the means of production is the core of any socialist program and that the “mixed economy,” three-fourths private, one-fourth public, so admired by the welfare-staters, gives far more to the capitalists than to the workers.

Instead of sliding back to liberalism, Jenkins urges Labor to move ahead to a planned economy through more extensive nationalizations. Socialism means, he says, “a revolutionizing of the status of the industrial worker in a machine society.” He projects a series of measures designed to give the organized workers a bigger say in the making and execution of policies and greater control over the operations of the nationally administered industries. These cannot be either democratized or effectively operated without abolishing the outworn owner-employee relationship perpetuated in the present setup.